Not all Shits and Giggles in Beijing

 

China, one of the world’s largest economies, has over the years been experiencing enormous changes. The showdown starts when Beijing’s economy is faced with a financial crisis that resulted in amusements parks and governments vehicles abandoned as a result of debts that have not yet been settled.

An employee in an office above the empty Jiyanghu amusement park stressed that, ‘we have amusement park and a large shopping and dining area here, but about financing I do not have the idea where it comes from’.

The amusement park was built 3 years back in the city of Zhanjiagang and is believed to be owned by the municipal authority of that region and funded through a medium of the Beijing’s local government financing. Moreover, as Beijing tries to spur the economy, and many pending projects like the amusement parks and some flash vehicles, are coming back to life.

This development signifies that funding a pressing need for revival in investments is not the responsibilities of commercial banks alone. In an attempt to revive the local government financing vehicles, Beijing is restructuring capital into the bank’s policy of the state paving ways for alternative funding sources to improve in the area of private lenders and internet financing.

At one of the LGFV in Jiangsu province, the leader of the finance department shared that

“the nation’s economy is in difficult times and the government is trying to control its debts, but cannot hesitate to do something to save the economy from falling.”

The Future of The Economy

Beijing’s economy is officially predicted to be low at 7 percent this year, but the good news is, the economy is still strong based on global standards even though it may not at present be comfortable considering the fact that Yuan has fallen a bit last week. However, some economists suggest that the economy is gradually growing at 5% level which explains the reason why Beijing is trying to improve investment that has never been experienced since recovering from the global financial crisis.

Reports suggest that, for local government policy and that of the state to help revive the economy. Beijing is preparing new bonds that worth $313m to take care of other big projects and settle local government debts.

Bonds. Chinese… Bonds.

Bank lending has been slow in the first half of the year despite looser lending restrictions and interest rate drops that was observed in recent months; this is reflecting the bank’s role when it comes to bailouts of stock market by the government. However, when it comes to reviving park bricks-&-mortar investments, bonds are doing most of the heavy lifting for the chief owner of Jiyanghu Park. It is reported that, the smaller firms are gradually turning to non-bank finance generated from crowd-originated loans raised online that is connected to private lending firms, which can charge up to 15 to 18 percent of secured loans in China. The overall idea is based on the municipal investments policies that determine how productive local governments and smaller firms in China can get out of financial struggles.

Image from Pixabay.